Overview
Goldman Sachs maintained a Neutral rating on RBC Bearings but raised its 12-month price target to $542 from $500 after the company released fiscal third-quarter 2026 results. The updated target is nearly equivalent to the stock's trading level of $544.02, which sits under 1% below the 52-week high of $554.59. Data from InvestingPro indicates that the shares appear overvalued relative to that service's calculated Fair Value.
Quarterly performance and backlog
Goldman Sachs analyst Joe Ritchie noted that RBC Bearings' fiscal third-quarter operating income exceeded consensus estimates by 2%. Management reported a backlog of $2.1 billion, a 31% increase quarter-over-quarter, which aligns with the company's year-end target of roughly $2 billion.
The aerospace and defense segment showed particularly strong momentum in the quarter, posting approximately 20% organic growth. Goldman Sachs highlighted that about 90% of the present backlog is tied to aerospace and defense markets. Within that backlog, roughly $1.1 billion is associated with the marine end-market.
Analyst estimate changes
Following the results, Goldman Sachs adjusted its fiscal year 2026 earnings per share estimate to $12.15, up from $12.00. The bank left its forecasts for fiscal years 2027 and 2028 unchanged at $13.80 and $15.40, respectively. Goldman Sachs' new $542 target implies a calendar year 2027 free cash flow yield of about 2.5%, and the firm indicated it sees better risk/reward opportunities in other parts of its coverage universe.
Market reaction and performance
RBC Bearings has delivered strong market returns over recent periods, with a price return of 50.24% over the past year and 36.66% over the last six months. Despite that performance, Goldman Sachs' Neutral stance reflects a view that the current valuation and projected cash flow yield do not offer an attractive enough risk/reward relative to other coverage names.
Other analyst activity
Several other brokerages updated their views following the company's third-quarter disclosures. Truist Securities increased its price target for RBC Bearings to $599 while maintaining a Buy rating, citing gross margin expansion and elevated aerospace and defense volumes. KeyBanc raised its price target to $595 and kept an Overweight rating after the company's third-quarter conference call, pointing to a robust Aerospace & Defense outlook and a high-single-digit percentage growth forecast for the industrial sector in 2026.
Historical quarterly detail
On a comparable recent-quarter basis, RBC Bearings' third quarter of fiscal 2025 also posted results above expectations. The company reported adjusted EPS of $3.04 versus an anticipated $2.85, a 6.67% earnings surprise, while revenue totaled $461.6 million compared with a forecast of $460.07 million.
Takeaway
Goldman Sachs' target increase follows tangible operational strength in the quarter, notably in aerospace and defense and a growing backlog. However, the combination of an elevated share price relative to calculated fair value and a modest implied free cash flow yield has led the firm to retain a Neutral rating while citing more compelling opportunities elsewhere.